Pre-Budget 2024 Expectations with CA Cult – For Latest Updates

Pre-Budget 2024 Expectations with CA Cult – For Latest Updates

Interim Union Budget 2024 is almost there i.e., on 1st February 2024. In this regard, Team CA Cult estimated some areas where Hon’ble Finance Minister of India Nirmala Sitharaman should shed light during the forthcoming Union Budget 2024. Since, this budget is special from the government point of view as well, being last budget before the Indian general election, 2024, which directly or indirectly increases the expectations of the general public at large.

Standard Deduction for Salaried Employees

Upto F.Y. 2022-23, the standard deduction for salaried employees was available under the old tax regime amounting to INR 50,000. However, in the last Union Budget i.e., Budget 2023, Standard Deduction was made available under both Old Tax Regime and New Tax Regime. In order to promote the New Tax Regime, Government made it default Tax Regime for every salaried employee.
Now, salaried class people may expect some more relief by way of increase in Standard Deduction limit, which can either be under New Tax Regime or Old Tax Regime or Both.

Children Education Allowance

Currently, the children education allowance given to an employee to meet the tuition fees for maximum of two children is, Up to INR 100 per month per child for a maximum of 2 children.
and
Hostel Allowance to meet the Hostel expenditure of a maximum of two children is, Up to INR 300 per month per child for a maximum of 2 Children.

Currently, the limit of this allowance is nominal, which in today’s scenario is not aligned with the high school or tuition fees. During Union Budget 2024, this allowance should be taken care of and its limit should increase to some rational amount.

Long Term Capital Gain Exemption

Before the Union Budget 2018, Long-term Capital Gain (LTCG) was fully exempted under section 10(38) of the Income-tax Act, 1961. During Budget 2018, Section 112A was introduced and an applicability of the section 10(38) was revoked, due to which LTCG became taxable @10% after INR 1 Lakh u/s 112A.
Since, Union Budget 2018, there has been NO change in this exemption limit, which impacts the middle-class families of the Country.
If the Government proposes to increases the above limit, this will definitely be a welcoming amendment.

New Deduction/exemptions under the New Tax Regime

During the Union Budget 2023, a Standard Deduction of INR 50,000 was introduced under the New Tax Regime for Salaried Employees and made it a default Tax Regime and accordingly Tax liability of a person should be calculated until and unless, one opted for Old Tax Regime.
The Government, tried to convince people to go for new Tax Regime, as there is NO TAX UPTO INR 7 Lakhs. Therefore, in order to persuade the transition, people can expect to get some more deduction/exemption under new tax regime like HRA, LTA, 80C, 80D, with few changes in limits or might be as it is.

Changes in Tax Audit Limits for Business or Profession

Currently, Tax Audit Limits are tabulated Below:

*If, aggregate of all amounts received and all payments made during the previous year, in cash, does not exceed 5%.

# where the amount or aggregate of the amounts received during the previous year, in cash, does not exceed 5% of the total turnover or gross receipts of such previous year.

^ where the amount or aggregate of the amounts received during the previous year, in cash, does not exceed 5% of the total gross receipts of such previous year.

The above limit under section 44AD and 44ADA was revised in Union Budget 2023, last year. We may find some changes in the provisions for the applicability of Tax Audit. The Government, uses Cash Transaction restriction beyond 5% to get higher limit for Tax Audit Compliance, which fulfils the objective of Digital India (Digital Payment Mechanism) an effective way to keep track of the financial transactions and obviously, helps in managing the records and increases the transparency.

DEDUCTIONS

1. Increase in the limit of Deduction under Section 80C:
   For a long time, people have been waiting for the hike in the most common deduction provided u/s 80C. Currently, a deduction of INR 1.5 Lakhs is allowed under section 80C.
   It is high time to amend the limit, definitely going to be beneficial for most taxpayers, especially the middle-class employees.
2. Currently, the deduction of LIC premium and PPF are covered under the limit of INR 1.5 Lakhs u/s 80C. The government can provide an extra deduction limit for LIC Premium or PPF Contribution as available for NPS u/s 80CCD(1B). There are many options under section 80C, where an assessee can invest or claim the deduction and accordingly, the limit of INR 1.5 Lakhs consumed very easily. Therefore, either increasing the limit of Section 80C or providing an extra amount of deduction to some specific area would reduce the tax burden a bit as well.
3. Deduction for Medical expenditure: After COVID-19 pandemic, we have witnessed an increase in health issues irrespective of age. Medical expenses are higher than the income and increasing the deduction limit under section 80D and other relevant sections would be appreciated by the nation at large.

Other areas:

1. 1. Change in Tax Slab Rates of Individuals, Companies, Firms, etc.
   2. Relaxation for middle-class Citizens from Tax Burden and Higher Taxes for Higher class Assesees.
   3. Youth of the Nation, going to foreign in search of better jobs, which leads to our country losing the man-power it needs to grow. The government must shed light on Creating More Job opportunities as well.
   4. Provisions to promote production-linked incentive schemes and MSME Sectors, as introduced in last year’s Budget i.e., Promoting timely payments to Micro and Small Enterprises.

You can also comment with your estimate on the Budget and stay connected for more updates on Union Budget 2024.

Disclaimer: The above blog is just an estimation for Union Budget 2024 and cannot be considered as Law or Act or any type of legal advice.